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A Question of Loyalty - How to Leverage Loyalty Programs to Supercharge Corporate Responsibility

Mark Caduc

David Clemmons

By Mark Caduc and David Clemmons

As corporate responsibility becomes more mature as a
practice, and better integrated into the day to day business of most companies,
the expectations of CR leaders for greater impact and accountability are
rising. Initiatives like the Global Reporting Initiative (GRI) are helping to
standardize CR reporting, but a big question remains. Is better reporting
enough?

Purpose-driven companies, particularly those with
consumer-facing brands are missing a golden opportunity to increase both the
visibility and the impact of their CR efforts, while changing the fundamental
relationship with their best customers.

Enter the loyalty program

Loyalty programs are pervasive in today’s consumption-driven
economy. Buy a dozen donuts, bagels or croissants and get the 13th free
(except, perhaps, for some unwanted calories). Worry not though, your local gym
has the answer to that – a free-month when you get a friend to sign up for a
new membership.

Credit cards, airlines, hotels, travel websites – all let
you earn points. The motivation to spend is linked to the benefits of spending
(the rewards). And oh the things we’ll do for free stuff – discounts, cash
back, trips, stays, coffee.

Are traditional loyalty programs outdated?

Two problems with loyalty programs are differentiation and
value perception. According to a 2015 loyalty census by Colloquy, there are an
average of 29 loyalty program memberships for every American household, but
only 12 of those are active[1]. To make
matters worse, about a third ($16 billion) of the $48 billion worth of loyalty
points earned each year in the U.S. are never used.[2] There
are now so many loyalty programs that it is hard for consumers to differentiate
one from another and to see the value of those programs. Loyalty occurs not
when points are earned, but when they are redeemed. It is only then that a
company fulfills its promise to give back something of value to the customer in
return for their repeat business. By this standard, many loyalty programs are
failing to deliver on one of their primary purposes – to create loyal
customers.

What is the link to CR?

Imagine if those $16 billion per year in unused loyalty
points could be used to fund CR projects instead.

The Internet and social media have created a new, more
demanding breed of consumer. The modern consumer actually has three very
distinct personalities which at any time manifest themselves to a greater or
lesser degree. We call these “Materialistic Me”, “Social Me” and “Altruistic
Me”.

As each of us have become social media stars in our own
version of the online fame game, loyalty programs that merely reward their
customers with stuff for themselves “Materialistic Me” will not satisfy the
desires of a generation born into a society where recognition is measured in
terms of followers, friends, thumbs ups, likes, and re-tweets – the emerging
“Social Me”.

Social Me is a global citizen, visible and accessible to
all. It is the global personification of oneself online, which challenges
traditional egocentric and ethnocentric models. It represents the emergence of
a self that, at the very least, considers people other than oneself, immediate
family, and close personal friends. Typical loyalty programs are only just
beginning to tap into this world-centric self.

Working with their loyalty marketing departments, CR
executives should consider devising projects that further their CR objectives, funded
by loyalty points. Social media could be used to encourage collaboration and
networking, while game elements (e.g., badges, levels, leaderboards) could
provide recognition and status for “Social Me”.

Beyond Social Me (which still seeks personal rewards), there
is a third me, the “Altruistic Me” who is more concerned with what can it do
for others. Altruistic Me serves a higher purpose (giving back/paying it
forward).

CR leaders should consider establishing clear measures for
how the success of their customer-funded projects will be determined from the outset
and include the development of the tools to measure them into the project if
they do not already exist. The same social media that can facilitate collaboration
with customers during the funding phase can also be used by companies to share
the progress and outcome of loyalty-funded projects during the implementation
and operational phases. For Altruistic Me, personal satisfaction is the biggest
reward of all.

Bringing it home

Loyalty programs are the key for savvy CR leaders looking to
supercharge their CR efforts. They can be used to engage the company’s best
customers in CR initiatives, increasing visibility into the causes that matter
most to them and the good work they are actually doing. From a loyalty
perspective, diversifying loyalty programs makes sense also. By not only
offering materialistic rewards but helping customers find the path to social
recognition (social rewards) and personal enlightenment (altruistic rewards),
companies can distinguish their programs from those of the competition, while
satisfying the needs of a new generation of consumers who believe that the best
way to do good for themselves is by doing good for others. They can create a
truer kind of loyalty, one based on shared values and accomplishments rather
than purely financial transactions.

Mark Caduc (mark@loyalme.org)
is a successful intrapreneur turned entrepreneur, a technology and innovation
leader with a passion for developing corporate strategy, building corporate
innovation capabilities and delivering innovative business and technology
solutions. He is currently working with purpose-driven companies to engage
consumers in corporate initiatives for social and environmental good.

David Clemmons (david@loyalme.org)
is the founder of the voluntourism movement, launching VolunTourism.org in
2003. Since then he has focused on delivering and sharing information and
research with practitioners, students, academics, community representatives and
travelers from across the globe on the integration of voluntary service with
travel. His insights on voluntourism have been reproduced worldwide in multiple
languages and have helped to shape policy, guide research, generate debate, and
educate the media.

For more information on
loyalty-funded corporate responsibility, visit www.loyalme.org.